The Bush administration is concerned that Israel’s housing squeeze may lead a growing number of Israelis, not just Soviet immigrants, to settle beyond its pre-1967 borders.

“Financial incentives to settle in the territories continue to exist,” John Kelly, assistant secretary of state for Near Eastern and South Asian affairs, told a House subcommittee Tuesday. As the population grows within the so-called Green Line, the pre-1967 borders, more Soviet Jews and others “may be going to the settlements,” he said.

Kelly said less than 1 percent of Soviet immigrants have settled in the West Bank or Gaza Strip in the past year, but warned that in that period, the territories’ overall Jewish population grew by 10,000 to 12,000 people.

Ruth Yaron, spokeswoman for the Israeli Embassy here, could not confirm the population growth, but she said “it’s difficult to argue with the trend” that there is population growth in the territories due to the housing shortage. She said 75,000 to 80,000 Jews now live in the territories.

One Israeli observer here criticized Kelly’s statement before the House Foreign Affairs subcommittee on Europe and the Middle East as “very similar to the argumentation that King Hussein (of Jordan) is using.”

At its June summit in Baghdad, the Arab League criticized both Soviet Jewish immigration to the territories as well as immigration to Israel proper.

HOUSING LOAN GUARANTEES

Also in his testimony, Kelly affirmed administration support for the $400 million in housing loan guarantees for settling Soviet Jews in Israel proper, as signed into law by Bush in May.

The United States has yet to ask Israel for certain assurances about where they settle Soviet Jews, which has been one of its conditions for giving Israel the green light to seek the $400 million in loans from commercial banks.

Kelly, however, said he expected those concerns to be worked out in the “near future. I would hope for a rapid wrapping-up of the matter,” Kelly said.

Two possible wrap-up dates are Aug. 9 or 10, when Secretary of State James Baker and Israeli Foreign Minister David Levy are scheduled to meet here. But a State Department official said it is unlikely that the issue would be resolved by then.

On other matters, Kelly said there is “no conclusive evidence that Israeli cluster bombs have been used” in Ethiopia by government forces.

At the hearing, Rep. Mel Levine (D-Calif.) charged that President Bush “pointedly omits” the name of Israeli Prime Minister Yitzhak Shamir in his public statements when he commends Egyptian President Hosni Mubarak and Jordan’s King Hussein for making positive contributions to the region.

“It is unfortunate,” he said, that at the highest level of government, “there has been allowed, by calculation or default, a process to develop where there is no warmth between the president of the United States and the government of Israel.”